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Suppose the current exchange rate is 100 yen per dollar. We currently sell 100 units of a product for 700 yen. The cost of producing
Suppose the current exchange rate is 100 yen per dollar. We currently sell 100 units of a product for 700 yen. The cost of producing and shipping the product to Japan is $5, and the current elasticity of demand is -3. Find the optimal price to charge for the product (in yen) for each of the following exchange rates: 60 yen/$, 80 yen/$, 100 yen/$, 120 yen/$, 140 yen/$, and 160 yen/$. Assume the demand function is linear.
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from the elasticity of 3 it means the optimal margin is 3333 033 ...Get Instant Access to Expert-Tailored Solutions
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